Grading on a curve: Smartwatches in 2014

I’ve just published a new report for my subscription clients on the topic of smartwatches. The report combines consumer research on demand drivers for smartphones, such as fitness tracking and the use of push notifications, with a review of the state of the products on offer from the major vendors. I thought for this week’s column I would share some of the high level findings with you. In short: the demand drivers for smartwatches are not strong at all and it will take a really transformative product to stimulate demand beyond the current niche levels. Let me explain.

Among the major functions smartwatches look to perform today, two stand out: fitness tracking and push notifications on the wrist. The major challenge for smartwatch vendors is neither of these is exactly a mass market proposition. My surveys indicate 80% of the US and UK populations has never used a fitness tracker at all, and, of those who have, roughly half have abandoned them. Only about 10% of the population in these two countries see enough value in fitness trackers to use them today and, if the past abandonment rate keeps up, that number may yet fall. Turning to push notifications, about three quarters of the smartphone population uses them, which sounds good. But digging deeper shows (a) only about half the US population uses a smartphone and (b) of those who use push notifications, many use them for a single app only (often text messaging) and many more use them for only two apps. I believe the sweet spot for a smartwatch majoring on push notifications is people who use them for three or more apps, and that’s only about a quarter of smartphone users, or about 15% of the US population as a whole. Even extending the research to possible future smartwatch functions such as payments doesn’t help very much. In our surveys, almost two thirds of the US population had never used mobile payments, and under 10% use them regularly.

As I started to think about this column over this past weekend, I was drawn to the comparison between the smartwatch market today and the smartphone market in 2007, and I visualized Steve Jobs’ iPhone Keynote slide with the leading smartphones of the day. Imagine my surprise when I woke up on Monday morning and saw Dan Frommer of Quartz had used that very image in an article on smartwatches. But I still think the comparison is apt, and not just for the reasons Frommer talks about. Yes, there is potential for a new entrant in the market to disrupt the existing players, but only one of the existing players in this market has built a business around smartwatches in the way Palm, RIM, Nokia and Motorola had around phones in 2007.

The real point here is that smartwatches today, like smartphones then, had a niche appeal. Smartphone penetration in the US was in single digits in 2007, and that reflected the fact most people hadn’t seen the need to buy one. Smartphones in the US were work-centric, focused on delivering email and a basic web browsing experience. Apps for anything beyond PIM (personal information management) were poor or non-existent and, as such, the vast majority of the general population saw no need for one. Those that needed one would likely be issued one by their employers, and a few hobbyists would buy one for personal use or because their employer didn’t see the need.

All that changed dramatically in 2007 when Apple introduced the iPhone and gave people a fundamentally different set of reasons to buy a smartphone. It now became a sort of pocket computer, good for all sorts of tasks beyond email and work. And of course over the next few years, we saw other phone makers adopt a similar approach, and Android-based devices eventually take majority share of the much expanded smartphone market. But it took a new entrant with a different conception of what a smartphone could be to take the market to a different level, and it’s quite possible the market would have continued its slow growth if the iPhone hadn’t come along.

If smartwatches are to succeed then, we need an existing player or a new entrant to do something similar to what the iPhone did to smartphones in 2007: that is, fundamentally reinvent the category so one of two things happens:

  • The experience built around the two key functions today – push notifications and fitness tracking – becomes so much better it stimulates demand where there is currently very little of it, or
  • One or more smartwatches reinvent the category in such a way they are seen completely differently, serve different functions and meet a real need consumers don’t even realize they have.

However, if I look at the smartwatches on offer today, and the response among the people who review such devices, I can’t escape the notion we’re selling ourselves short and kidding ourselves that the current crop of smartwatches is already very good. There are a number of major sites that do tech reviews and many of them do good work. I’ve chosen to use the Verge’s reviews to illustrate my point here, but other sites would likely provide similar results. The chart below shows review scores (out of 10) from the Verge for three product categories: smartwatches, smartphones and tablets:

Grading on a Curve - Verge scores

The first thing to look at is the highest scores in each category. Apple claims the top spots in tablets with scores of 9.3 for both its current tablets. In smartphones, the pack is a little tighter with several phones scoring 8 or higher, including the Nexus 5 at 8.0, and the LG G3, iPhone 5C, iPhone 5S and HTC One M8 all between 8.3 and 8.8. Now look at the smartwatch category, where the original Pebble and the Pebble Steel both score above 8. That puts them in the same range as the iPhone 5S, HTC One M8 and LG G3, and above the Samsung Galaxy S5, which scores 7.8 in the Verge’s reviews. If you have any experience with these devices, you may be asking yourself how on earth today’s smartwatches could be comparable to the best smartphones on the market.

But the answer is simple: we’re grading on a curve here. The bar has been set so low for smartwatches that a device as flawed as the Pebble gets a score as high as the iPhone 5C or the LG G3, even though the latter devices do a far better job of meeting needs in their category than the Pebble (or any other smartwatch) does in its category. If you really take a step back and look at what you’d want your ideal smartwatch to do, I think you’d include the following criteria:

  • Attractiveness – the watch has to look good on the wrist, as a more personal device than any other piece of technology, and it has to look good on a variety of wrists, not just larger men’s wrists. It should be stylish, and recognizable as a fashion accessory and not just a gadget.
  • Size – the smartwatch shouldn’t be overly bulky, fitting comfortably but also not looking out of place on a wrist. Again, it needs to meet this need for a variety of body types.
  • Display – the display should be high resolution, as our smartphone and tablet screens are, bright and easy to read indoors or outdoors, and always on, at least to some extent, for easy “glance-ability”.
  • Battery life – the battery should last for days, and ideally a week. Less than that means you have to frequently remove it. Any longer than a week (unless the battery life is truly watch-like) and you forget to charge it
  • Chargeability – speaking of charging, the watch needs to be easy to charge. In an ideal world, you’d charge it without taking it off, either wirelessly or via motion.
  • Functionality – the smartwatch needs to do its job well, whether it’s fitness-centric, notification-centric or serves some other function.
  • Useful interactions – a tiny wrist worn screen is not ideal for text input, to say the least. But the device should be interactive in a useful way, through voice, gestures, buttons or touch.

Measured against these criteria, the current crop of smartwatches does very poorly. I did my own ratings as part of my report and I ended up with scores which were barely above 50% across these seven categories. Unlike most reviewers, I don’t see the Pebble as the clear leader in this market – in fact, all the devices ended up clustered around a very small range of unimpressive scores. If we’re really honest with ourselves, we should expect much more of these devices before we embrace them. And unless they do more, we’re not likely to see them sell above current levels.

I come back to my sense that we’re in 2007 in smartphone terms (or 2010 in tablet terms, or 2001 in MP3 player terms). In each of those years, Apple entered the market with a new device which transformed the category and turned it from niche to mainstream in short order. In each case, existing devices were clunky, narrow in their appeal, performed poorly and failed to ignite consumer interest. Apple isn’t the only company that can do this – Sony arguably did it with the Walkman many years earlier and other companies have similarly reinvented other categories. But Apple is the one with the track record over the last 15 years or so, and I think that’s why everyone is so eagerly anticipating its entry into this market. But Apple faces the same challenges as any other company in this space: the technology fundamentally doesn’t seem to be able to deliver on the set of criteria I outlined above without serious compromises. Those watches which deliver better battery life tend to do it with clunky looking, low resolution screens. Those which have brighter screens tend to have quickly draining batteries. All of them are bulky and most are unattractive. Does Apple have the potential to somehow overcome these technical challenges, as it seemed to do with the iPhone in 2007? Or will it instead reinvent the category, taking a fundamentally different approach? Perhaps we’ll be surprised and Apple won’t even enter the smartwatch category directly at all, instead blazing a new trail. Whatever Apple ends up doing, I’m hoping it opens the eyes of the other vendors in the market to what’s possible, and helps them raise their game too. We can do much better.

My report, Smartwatches: Market Prospects, is available to subscription clients now, and is also available for sale to non-clients.

Published by

Jan Dawson

Jan Dawson is Founder and Chief Analyst at Jackdaw Research, a technology research and consulting firm focused on consumer technology. During his sixteen years as a technology analyst, Jan has covered everything from DSL to LTE, and from policy and regulation to smartphones and tablets. As such, he brings a unique perspective to the consumer technology space, pulling together insights on communications and content services, device hardware and software, and online services to provide big-picture market analysis and strategic advice to his clients. Jan has worked with many of the world’s largest operators, device and infrastructure vendors, online service providers and others to shape their strategies and help them understand the market. Prior to founding Jackdaw, Jan worked at Ovum for a number of years, most recently as Chief Telecoms Analyst, responsible for Ovum’s telecoms research agenda globally.

43 thoughts on “Grading on a curve: Smartwatches in 2014”

  1. This is off topic but I’m beginning to question whether Steve Wildstrom is ever coming back to Tech.pinions.

    1. I’ve asked him if he can put together an update. Bottom line is the recovery process, particularly reading and writing, has been very slow.

  2. “Perhaps we’ll be surprised and Apple won’t even enter the smartwatch category directly at all, instead blazing a new trail.”

    That’s a good thought, because the idea of a smartwatch is a fundamental mistake from the start.

  3. I’m leery about any smart sensors as standalone products. Apple’s or no. Here’s why: Apple succeeds when is device is a conduit for an ocean of digital content. Content this huge isn’t secret or in hiding:

    Apple succeeded with the iPod cus it was a firehose for music content. It succeeded, less so, with the iPad, more along the lines of the iPod Touch. Apple succeeded stunningly with the iPhone cus is was a firehose for music, apps, games. More importantly, it served up our own content: voice and text. Personally created content. Like Facebook posts. Like Twitter posts.

    Smart sensors, by definition, are not mega content conduits; they are content creating devices. And the content is tiny, timely, individual, occasional. Importantly, its individual content but not personal. Not content that we create. We are the content, not the creators. And our blood pressure or glucose reads ain’t likely to end up on Facebook, Twitter, iMessage, or as text on Mom’s iPhone.

    Sensor content is not firehose stuff.

    Smart sensors can serve to extend and support of Apple’s strategy to sell iPhones, which will serve as the super secure hubs for smart sensors on walls and in wallets. Apple will have to give these away. Not. Or have somebody … Mayo, Blue Cross, Medicare … give them away with significant financial incentives attached.

    I ain’t wearing nobody’s watch for free. It better be making me money.

    1. I’d be wary of assuming that all patterns that have applied to Apple devices in the past will apply to whatever Apple launches into this space. Apple is changing.

  4. “Among the major functions smartwatches look to perform today, two stand out: fitness tracking and push notifications on the wrist.”

    This isn’t what I want at all. I want more of a SmartSensor and the two big things I want it to do are identity and health tracking. Of course fitness info will be a subset of what the SmartSensor tracks but health is the more important aspect for me. And identity is huge.

    1. the technology is not there yet when it come to health tracking,

      besides a SmartWatch is not a medical device,

      1. It is simply not accurate to say the technology is not there re: health tracking. It is not fully realized (and won’t be for a long time), but we are at the beginning and there is already much that can be done. To completely dismiss it, as you have, is quite silly.

        While any initial sensor band that Apple creates will not be a medical device, there is still quite a lot of useful data that can be gathered and analyzed without trespassing into the Land of Regulations. Again, you’re looking at this as All or None and missing that there’s a lot of ground to cover between those options.

        1. there is a big difference between a fitness tracking device that rely on sensors and a health monitoring device which require more accurate sensor to make sure that the information are accurate to prevent lawsuit

          you can not create a health monitoring device in secret, and then introduce it to consumers without years of public testing by all sort of organizations, medical association, insurance company and the FDA before you can even thinking about selling to the public.

          Apple will either create a Fitness Band similar to the one on the market already which will be a shame for a company of their size, or a SmartWatch similar to the Moto 360 with hope of adding more health function to it in the future.

          Forget about all the Health Stuff, it won’t happen otherwise we would have known about it already.

          1. Yes, I’m sure you’re right. If Apple was doing anything on the health front we’d have heard about it already. Perhaps at WWDC 2014 in early June, that would have been a good time to announce some kind of health initiative. And of course we would have also already heard about major partnerships in the area of health between Apple and orgs like the Mayo Clinic or Epic Systems. And surely we’d be seeing news headlines about Apple working with major healthcare providers.

            But alas, none of that has happened, *in the alternate reality in which you live*. In the real world, all of this actually did happen. Oy.

          2. you seem to have no clue of what is require regulation wise to sell a medical device in the western world.

            who do you think will buy a medical device from Apple without Public testing, by many physician and medical association.

            who do you think who be held responsible in a lawsuit when somebody kill himself because his IWatch told him that his blood pressure was too High.

            who do you think will manage all of these Data generate by all of these sensor at the Hospital when they already struggle to manage you medical history.

            the biggest issue with health care is not devices nor technology it’s Bureaucracy and regulation, and the Gate Keeper is not Doctor nor Hospital, is the Insurance company that pay for your care.

            You live in a bubble my friend

          3. Hmm, you just said “the technology is not there yet when it come to health tracking”, but now you say “biggest issue with health care is not devices nor technology”. So which is it? Is the technology not ‘there’ or is the technology not an issue (implying it is ‘there’). You’re contradicting yourself, again.

            Apple is already moving ahead with a health initiative (it seems like you weren’t aware of that), unless you’re going to deny reality (which you seem to be trying very hard to do). I would have thought it was obvious there’s a lot of ground to cover between zero health data and the kind of health data that requires strict regulation.

            I guess in the alternate reality where you live there are no over the counter or non-prescription medical products of any kind. None at all.

          4. Don’t twist my words

            when i said that the technology was not there yet i was referring to Sensor that can monitor vital data of the Human body that is difference than Fitness.

            every device that provide Vital information on human biology will require regulation and public testing to get approval for sell to prevent stupid lawsuit.

            i never said that Apple does not have a Health initiative,
            my point was simple
            Apple cannot introduce a device that provide Vital information of human Health and biology without public testing, it doesn’t work this way
            they are more likely to create a Fitness device then adding more health function to it in the future

          5. There’s no need for me to twist your words, you’re doing a great job of that all on your own. To sum up, you’re basically saying Apple can’t do a thing *while* Apple is preparing to do that thing.

          6. Do you? I would love to hear how you define the difference between them. The two are intertwined, but I would say Fitness tracking leans towards specific data related to some form of exercise, while Health is data measured more passively throughout the day. There are many kinds of Health data that can be gathered without wandering off into Regulation Hell. You’ve even admitted this, when you characterized it as ‘vital’ health info. There are levels here, lots of ground in between zero and all. You seem unwilling to admit this truth.

          7. I think you guys are talking about a really important feature of the new iBand that the encumbents are not able to understand. The iBand is not going to do something that has never been done before. It is going to put the data in a place and in a format that will make it instantly available to the doctor. Thermometers are already well understood devices. If the doctor could see the temperature change as measured over a long period of time that has taken place with your young child, he would be much less likely to assume you are just another helicopter/hypochodriac parent. The child may have a natural lower or higher temperature at some time of the day. Being able to see this as a background to the diagnostics is something current doctors cannot do.

            blood pressure
            oxygen saturation
            sweat/ moisture on skin
            photo of cut, contusion or broken leg

            Data from another medical device like a pacemaker, sleep apnea mask, or insulin pump that is streamed by the iBand to the network.

            The issue is not getting medical approval. The issue is making the data private, and getting it to the doctor in a timely manner. Real time solves the first problem. The iBand will solve the second problem, and Apple’s ecosystem will ensure that most medical devices will be supporting the iBand.

          8. Yes, there’s a lot Apple can do within the framework of current regulations/limitations. But I would guess Kenny will define health tracking as ‘if Apple is doing it then it isn’t health, it’s fitness’, even though it will clearly be health info.

          9. any device that provide vital information of the human body such as
            blood pressure, pulse, temperature, oxygen saturation, sweat/ moisture on skin will require public testing for accuracy.

          10. There’s a lot of confusion about what the FDA does and doesn’t have to approve. I’m not an expert, but from people I’ve talked to who work in this space, what Apple is doing with HealthKit sits entirely outside the realm of what requires FDA approval. What Apple is promising to do is help people get control of their own health information in a way that’s been very tough until now for all the reasons you talk about. Apple isn’t making diagnostic claims, or treating any diseases – merely allowing people to capture their own data and combine it with data their healthcare provider gathers on their behalf. The FDA doesn’t have to approve that, and insurance companies can’t get in the way of it.

  5. The problem with many analysts is the fact that you often seem to have a very short memory which tend to make your analysis based on the current popular paradigm instead of deep thinking.

    Here is where you get it wrong

    3 things to consider.

    1- the first IPhone had very bad review as well when compared to popular phone at that time, and the critics were similar to those writing against the SmartWatch today, it took apple 2 generation of IPhone to get they critic of their Back, the same was also true for the IPad therefore current review of a First generation of SmartWatch will tell you nothing about it’s Future and it’s success.

    2- Unlike the iPhone a SmartWatch is not a mass market product, it’s just an accessory to be paired with a Smartphone like a Headphone hence you cannot compare it’s success base on Mobile market.

    3 – in general, it took at least 2-3 generation to really define a market for a new product, the SmartWatch is on his Firs generation.

    1. 1 – The iPhone may have had bad reviews from some critics (though not all), but sold well from the start. In that sense, it’s the opposite of the situation with smartwatches today, some of which are well-reviewed as I demonstrate in the piece, but are not being bought.

      2 – The fact that it’s not a mass market product is exactly the point of the post, which is that they will remain marginal unless something changes. I believe that the right product could turn it into a mass market, but it remains to be seen whether Apple or someone else will launch such a product.

      3 – Agreed. But without some pretty dramatic changes, I don’t think we’ll see a compelling smartwatch based on the current trajectory anytime soon (bear in mind Samsung is already on its second generation).

      1. 1- Unlike the Smart watch the iPhone sold well from the start because it was a necessary product and also because the market had already defined thanks to Blackberry, PoketPhone and many other before it.

        2-I see the market SmartWatch as an accessory to help strengthen an ecosystem not a product for growth due to the fact that it is not a necessity for most people to possess one as is the case for a Smartphone.

        3- maybe the change that you’re talking about will be the Moto 360 who knows.

        1. See my comment above your original comment – the smartphone market did exist, but the need the iPhone met was a totally different one (it didn’t have push email, contacts or calendars, which was BlackBerry’s main selling point). Smartphones in general were not “necessary” in 2007 any more than smartwatches are necessary today. This applies to your second point too.

          1. I disagree

            The first IPhone just extended the capabilities of the Blackberry because of touch and a lager screen,
            the main selling point was the fact that it was a combination of an IPod Touch and a Phone in the same package and was less expensive due to carrier subsidize than an IPod Touch.

            i do not expect the SmartWatch to replicate this level of success unless it can replace you Smartphone.

  6. It will not be an iWatch unless it is tied to the Apple TV (watch a “screen.”)

    I believe Apple will continue the iP naming series by calling it the iPulse and marketing it as the center (pulse) of your “connectedness”. The pulse name will fit in with all the obvious health applications but also can be thought of being core to “the pulse (beat or Beats) of your daily life.” Many very moving commercials showing that theme will immediately follow its announcement.

    Also, you constantly refer to “smartphones” as existing before the iPhone. Not.

    1. You may have your own definition of a smartphone, but by any reasonable definition they certainly existed before the iPhone. But to the point I make in the post, the iPhone rather changed what people expected when they heard that term (just as I suspect whatever Apple launches into this space will change people’s perception of wearables).

    2. I know what you mean about “smartphones” not really existing before the iPhone, just like there is no such thing as a “smart” TV, unless you believe that vile crap stuck to a screen makes a smartTV, just like the practically useless garbage that was stuck to a phone (pre iPhone) made it a smart phone. The only reason the AppleTV has been unable to redefine the “TV” experience is that the media companies saw them coming this time (post iPod) and desperately hung on to what they thought they had, screwing everyone as a result. While apple is insanely great, greed and stupidity are extremely difficult to overcome (remember the GFC, politics, Iraq, etc?)
      The iWearable, if it exists, will undoubtedly have huge potential to blow us away and redefine markets and expectations, but I have no idea if it can be like the iPhone or end up like the appleTV.

      1. The satellite service we use just upgraded their channel guide software UI goo, and it’s terrible. They obviously spent a lot of time and effort working on it, putting in what I would assume is their best effort, and it is just awful.

  7. Why is not privacy on your list?

    Do I want my gym, health watch, selling my exercise data to my health insurance company?

  8. What if the market for smart watches was that 50% of non-smartphone users ? iPhone Nano, if you like ? Make it a good-looking dumb watch, with a battery that lasts weeks (well, at least 1 week), that can take and make calls in a pinch.
    I’ll take 2 for my parents, who are forever forgetting to bring their mobile phones along.

  9. one thing I don’t get the other devices they only make it for men it’s like they never seen women before and
    Google if you would start making stuff for the female you would make more money, their more of us any way
    and we like to shop more so think about.

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